PennantPark Investment (NASDAQ: PNNT) and PennantPark Floating Rate (NASDAQ:PFLT) are both small-cap finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their profitability, risk, dividends, valuation, analyst recommendations, earnings and institutional ownership.
This is a summary of recent ratings and price targets for PennantPark Investment and PennantPark Floating Rate, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|PennantPark Floating Rate||0||0||3||0||3.00|
PennantPark Investment currently has a consensus target price of $8.30, indicating a potential upside of 18.74%. PennantPark Floating Rate has a consensus target price of $14.58, indicating a potential upside of 8.91%. Given PennantPark Investment’s higher probable upside, equities research analysts plainly believe PennantPark Investment is more favorable than PennantPark Floating Rate.
Valuation and Earnings
This table compares PennantPark Investment and PennantPark Floating Rate’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|PennantPark Investment||$124.53 million||3.99||$61.71 million||$0.79||8.85|
|PennantPark Floating Rate||$59.50 million||8.72||$36.32 million||$1.10||12.17|
PennantPark Investment has higher revenue and earnings than PennantPark Floating Rate. PennantPark Investment is trading at a lower price-to-earnings ratio than PennantPark Floating Rate, indicating that it is currently the more affordable of the two stocks.
PennantPark Investment pays an annual dividend of $0.72 per share and has a dividend yield of 10.3%. PennantPark Floating Rate pays an annual dividend of $1.14 per share and has a dividend yield of 8.5%. PennantPark Investment pays out 91.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. PennantPark Floating Rate pays out 103.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. PennantPark Investment is clearly the better dividend stock, given its higher yield and lower payout ratio.
This table compares PennantPark Investment and PennantPark Floating Rate’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|PennantPark Floating Rate||47.64%||7.49%||4.48%|
Volatility and Risk
PennantPark Investment has a beta of 1.13, suggesting that its stock price is 13% more volatile than the S&P 500. Comparatively, PennantPark Floating Rate has a beta of 0.56, suggesting that its stock price is 44% less volatile than the S&P 500.
Institutional & Insider Ownership
42.9% of PennantPark Investment shares are held by institutional investors. Comparatively, 31.6% of PennantPark Floating Rate shares are held by institutional investors. 2.0% of PennantPark Investment shares are held by insiders. Comparatively, 1.0% of PennantPark Floating Rate shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.
PennantPark Investment beats PennantPark Floating Rate on 10 of the 15 factors compared between the two stocks.
PennantPark Investment Company Profile
PennantPark Investment Corporation is a closed-end, non-diversified investment company. The Company is a business development company. Its objectives are to generate both current income and capital appreciation while seeking to preserve capital through debt and equity investments primarily made to the United States middle-market companies in the form of senior secured debt, mezzanine debt and equity investments. The Company’s debt investments may generally range in maturity from 3 to 10 years and, are made to the United States and to a limited extent, non-United States corporations, partnerships and other business entities, which operate in various industries and geographical regions. In addition, it may invest up to approximately 30% of its portfolio in non-qualifying assets. It invests in sectors, such as aerospace and defense; energy/utilities; auto sector; environmental services, and beverage, among others. PennantPark Investment Advisers, LLC is the Company’s investment advisor.
PennantPark Floating Rate Company Profile
PennantPark Floating Rate Capital Ltd. is a business development company. The Company is a closed-end, externally managed and non-diversified investment company. Its investment objectives are to generate current income and capital appreciation by investing primarily in floating rate loans and other investments made to the United States middle-market companies. It provides first lien secured debt and other opportunistic financings (senior notes, second lien, mezzanine, private high yield debt, and preferred and common stock) to middle market sponsors and companies. Its investments may include equity features, such as direct investments in the equity securities of borrowers or warrants or options to buy a minority interest in a portfolio company. It has investments in various sectors, including aerospace and defense; consumer services; healthcare and pharmaceuticals, and others. Its investment activities are managed by the investment advisor, PennantPark Investment Advisers, LLC.
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